McFarland v. Liberty Ins. Corp., 434 P.3d 215

Ryan and Kathryn McFarland owned a Garden Valley, Idaho property with three structures: a cabin (main residence), a detached garage with an upstairs bonus room, and a pump house for geothermal heat.
The McFarlands held a Liberty Mutual homeowner's policy that provided Coverage A (Dwelling Coverage, $188,500) for "the dwelling on the 'residence premises'... including structures attached to the dwelling," and Coverage B (Other Structures Coverage, 10% of Dwelling limit) for "other structures on the 'residence premises' set apart from the dwelling by clear space." "Dwelling" was not defined; "residence premises" was defined by reference to the declarations (which listed only the address).
In Feb 2017 a radiant heater in the bonus room failed, causing hot geothermal water to flood the bonus room and garage, damaging the garage structure and personal property. Liberty paid $23,467.50 initially but then said Coverage B limit was exhausted and refused further structural payments.
The McFarlands sued Liberty for breach of contract (seeking additional structural coverage), asserting the garage/bonus room fell within Coverage A. Both parties filed cross-motions for summary judgment on whether the garage was covered as the Dwelling or as an Other Structure.
The district court granted Liberty's motion, finding the policy unambiguous and "dwelling" synonymous with a single "house" (excluding the garage); the McFarlands appealed. The Idaho Supreme Court reversed and remanded.

Issue	Plaintiff's Argument (McFarland)	Defendant's Argument (Liberty)	Held
Whether "dwelling" is ambiguous in the policy	"Dwelling" includes structures habitually used for living (garage bonus room used for sleeping/recreation), so coverage A applies	"Dwelling" unambiguously denotes a single house-like structure; garage is an other structure under Coverage B	"Dwelling" is ambiguous; reasonably susceptible to both interpretations
If ambiguous, whether ambiguity is construed for insured	Ambiguity must be resolved against insurer, so dwelling should include cabin+garage	Ambiguity rule applies only to exclusions; here it does not change coverage allocation	Ambiguity resolved for insured; "dwelling" construed to encompass both cabin and garage
Whether policy language as whole removes ambiguity	Policy references and definitions (e.g., "residence premises") show intent to limit dwelling to main house	Policy scheme (singular "dwelling", separate Other Structures clause) supports one-structure reading	Reading the policy as a whole does not eliminate ambiguity; both readings remain reasonable
Whether Liberty is entitled to appellate attorney fees	Liberty sought fees under Idaho statutes for prevailing party	N/A	Liberty did not prevail on appeal; no appellate fees awarded

Tiller White, LLC v. Canyon Outdoor Media, LLC, 160 Idaho 417, 374 P.3d 580 (standards for de novo review of summary judgment)
Fisher v. Garrison Prop. & Cas. Ins. Co., 162 Idaho 149, 395 P.3d 368 (use ordinary meaning for undefined policy terms)
Clark v. Prudential Prop. & Cas. Ins. Co., 138 Idaho 538, 66 P.3d 242 (insurer must use clear language to limit coverage)
Markel Int'l Ins. Co., Ltd. v. Erekson, 153 Idaho 107, 279 P.3d 93 (ambiguity exists where terms are reasonably subject to differing interpretations)
Farm Bureau Mut. Ins. Co. of Idaho v. Schrock, 150 Idaho 817, 252 P.3d 98 (ambiguities in adhesion policies resolved against insurer)
Melichar v. State Farm Fire & Cas. Co., 143 Idaho 716, 152 P.3d 587 (undefined policy term may not be ambiguous where settled legal meaning exists)
Arreguin v. Farmers Ins. Co. of Idaho, 145 Idaho 459, 180 P.3d 498 (failure to define a term when others are defined weighs toward ambiguity)
Cherry v. Coregis Ins. Co., 146 Idaho 882, 204 P.3d 522 (ambiguities construed in favor of insured)
Coffey v. Girard Ins. Co., 182 Kan. 599, 322 P.2d 345 (multi-structure coverage analyses and habitation relevance)